Tentative Board Decisions
Tentative Board decisions are provided for those interested in
following the Board's deliberations. All of the reported decisions are
tentative and may be changed at future Board meetings.
Wednesday, July 13, 2016 FASB Board Meeting
Financial instruments—hedging. The Board discussed the following:
- Clarification of the "time" requirement when using the "critical
terms match" (CTM) method to assess effectiveness for a group of
forecasted transactions
- Partial-term fair value hedges under the shortcut method
- Retrospective transition method
- Presentation of the reclassification of hedging amounts in
accumulated other comprehensive income (AOCI) in situations involving a
missed forecast
- Analysis of the costs and benefits of the Board's decisions
- Permission to ballot a proposed Accounting Standards Update and comment period.
Clarification of the "Time" Requirement When Using the "Critical
Terms Match" (CTM) Method to Assess Effectiveness for a Group of
Forecasted Transactions
The Board decided that it would allow an entity to use the CTM method
for a cash flow hedge of a group of forecasted transactions if the
forecasted transactions occur and the derivative matures within the same
31-day period and the entity meets all other requirements for the CTM
method.
Partial-Term Fair Value Hedges under the Shortcut Method
The Board decided that it would amend one criterion of the shortcut
method related to the matching of the expiration date of the interest
rate swap and the maturity date of the hedged item. That amendment would
allow partial-term fair value hedges of interest rate risk under the
shortcut method.
Retrospective Transition Method
The Board decided that it would not allow the retrospective method of
transition. Therefore, only a modified retrospective approach would be
permitted.
Presentation of the Reclassification of Hedging Amounts in
Accumulated Other Comprehensive Income (AOCI) in Situations Involving a
Missed Forecast
The Board decided to require that if a hedged forecasted transaction is
probable of not occurring, amounts reclassified from AOCI to earnings be
presented in the same income statement line item in which the hedged
forecasted transaction would have been presented had the forecasted
transaction occurred. The Board will include a question in the
forthcoming proposed Accounting Standards Update on this decision.
Analysis of the Costs and Benefits of the Board's Decisions
The Board concluded that it has received sufficient information and
analysis on the forthcoming proposed amendments on hedging to make an
informed decision on the issues presented and that the expected benefits
of the amendments justify the perceived costs.
Permission to Ballot a Proposed Update and Comment Period
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.
The Board decided to provide a 75-day comment period for the forthcoming proposed Update.
Disclosure framework: disclosure review—defined benefit plans. The Board discussed a summary of comments received on the proposed Accounting Standards Update, Compensation–Retirement
Benefits–Defined Benefit Plans–General (Subtopic 715-20): Changes to
the Disclosure Requirements for Defined Benefit Plans. The Board
made no technical decisions; however, it directed the staff to perform
research on particular aspects of the proposed Update.